Lift the Cap: A fair deal for public service workers

Report type

Research and reports

Issue date

23 Mar 2017

Key findings

Six years of public sector pay restraint has had a significant impact on the living standards of five million public sector workers, with many public sector workers earning over £2K less in real terms than in 2010.

Public sector pay is set to decline further as the government adheres to a one per cent pay cap on the public sector pay bill till the end of this parliament, resulting in cumulative real terms losses of pay of over £4k for nurses, midwives, civil servants, firefighters and a range of other public service occupations.

Public sector pay is set to decline further in relation to private sector pay. As private sector pay awards outpace those in the public sector, public sector employers are facing an increasing recruitment and retention crisis.

Pay stagnation is affecting the living standards of public sector workers, with increasing numbers failing to keep pace with cost of living and relying on other forms of income either through increased borrowing, seeking agency work or employment outside of the sector.

Increasing numbers of public servants, particularly in local government and health, are working at or marginally above the national minimum wage.

Pay restraint is reducing disposable income in local economies, exacerbated by large public sector job losses, particularly in regions in the North, Midlands and South West with higher reliance on public sector employment, weak local labour markets and higher unemployment.

The TUC believes that the government should work with public service employers and unions to:

lift the public sector pay cap and allow public service wages to be determined according to the needs of each sector through collective bargaining between employers and unions or through genuinely autonomous and independent Pay Review Bodies where appropriate

reform Pay Review Bodies (PRBs) to ensure that relevant trade unions and employer voices are included within board membership and that PRBs are able to look at a wider range of issues than affordability – focusing on recruitment, retention, market comparisons, staff morale and the impact on services

place more value on all employees delivering public services by adopting the widely supported voluntary Living Wage, which is currently £9.40 per hour in London and £8.25 in the rest of the UK

increase the national minimum wage as quickly and strongly as can be sustained – the TUC’s medium-term goal is that all UK wage rates should reach at least £10 per hour

develop fair and sustainable pay structures that are easy to explain, understand and operate, with shorter pay bands and that guarantee progression based on transparent and objective appraisal systems, agreed in partnership between employers and unions.

It is 2017 and public sector workers are over half-way through a decade of government-imposed pay restraint.

The five million people delivering our public services, from job centres to hospitals, schools to local councils, have seen six years of pay freezes and pay caps that means many public sector workers will have seen their pay cut by over £2,000 in real terms.

The average public sector wage has been cut in real terms by three per cent between 2010 and 2016 using the government’s preferred CPI measure of inflation, or seven per cent if we use the RPI measure that includes housing costs. However, for many public sector workers this will be significantly higher. And if the current public pay policy continues, most public sector workers will be earning over £1,000 less in real terms by the end of this parliament.

As a result, morale is plummeting and recruitment and retention of workers in many of our most in-demand services is becoming increasingly difficult. Public service staff have worked hard to maintain the quality of services. But it is an uphill struggle and many of those working in those services believe they are suffering as a result.

This short report takes a snap shot of the current situation by listening to the voices of workers employed in our schools, our NHS and our local council and emergency services.

For the sake of those services and those of us who rely on them, we hope that the prime minister and the chancellor listen to these voices and others – the employers, the providers, the independent experts – and take a new look at how we are treating the workers who are the lifeblood of the essential services at the heart of our communities.